Organization Style, Leadership Strategy and Free-Riding

Abstract

Organizations often match leaders with followers in order to foster cooperation, mitigate free riding, and thereby accomplish tasks effectively. This paper studies the effect of organization styles on leaders' choices of leadership strategy, and the effect of this choice on free-riding behavior. In controlled experiments, leaders are asked to choose messages from a message set that induces a leadership style and to send it to followers in a repeated and finite horizon public goods game. When provided with collegial leadership style messages, leaders perform better than their top down counterparts, but only when targeted private communication is not allowed. When it is allowed, leaders who are instructed to be top down perform better by focusing on individuals, not the group, and by leading while accounting for contributor types. The paper uncovers core and understudied mechanisms of top down leadership, and challenges the consensus that collegiality is best for leading groups.

Keywords: leadership strategy, organization style, free-riding, cooperation, public goods game

JEL Classification: C92, D23, H41, L23